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Non-Tech : Gentex (GNTX) -- Ignore unavailable to you. Want to Upgrade?

To: Donald carlson who wrote (160)	2/17/1999 9:56:00 AM
From: Mark Brophy	Read Replies (1) \| Respond to of 196

Both companies are strong financially. Donnelly has $15m cash and $106m shareholder equity. In addition, they recently received $8m for their stake in VISION Group, a digital imaging company based in Edinburgh, Scotland (http://biz.yahoo.com/prnews/981224/mi_donnell_1.html). Gentex has $74m cash and $237m shareholder equity. Gentex has the edge, but I doubt Donnelly would be sending out dividends if that were interfering with their ability to gain share of the electrochromic mirror market. I would expect DON may take some of the 90% share from Gentex but the mirror market has about 7% auto penetration looks like it will grow faster than Gentex will lose market share to DON. It's also very expensive to take share away from a leader like Gentex if they don't cooperate. I don't think DON has the $$$. Given the current low penetration rate, I also reckon there's room for both companies to grow and prosper, but Gentex gives a different reason for their outstanding performance last quarter: The Company's gross margin also improved both sequentially and year-over-year, primarily due to higher yields on certain mirror products as a result of new coating equipment, the higher unit shipments and certain changes in estimates. ''We are very pleased with the results in the fourth quarter and for the year,'' said La Grand. ''While over two-thirds of the impact on the gross margin in the fourth quarter is a result of non-recurring items, we are very encouraged by the positive impact that the new coating equipment has had on our yields for some of our mirror products, and hope to continue to integrate additional coaters into other mirror lines over the next several years.'' The new high yield coater he refers to costs $4m and comes from Applied Films (Nasdaq:AFCO). Gentex was so impressed by the machine that they bought 10% of the company last summer. AFCO depended on Gentex for 15% of 1998 revenue, which consisted of coating glass. AFCO lost some or all of that business when they sold Gentex the coater, but they'll try to make up for it by selling more coaters. The interesting thing is that the company used to be called Donnelly Applied Films and Donnelly sold their 60% stake when the company went public in November, 1997. If Gentex increases their stake to more than 10%, Donnelly will have essentially sold Gentex one of their divisions!